The Clinton Herald, Clinton, Iowa

Business & Technology

September 3, 2013

Microsoft to buy Nokia phones, patents for $7.2B

(Continued)

The deal could fuel speculation that Nokia's CEO, former Microsoft executive Stephon Elop, will emerge as a top candidate to succeed Ballmer. Elop will step aside as Nokia's president and CEO to become executive vice president of Nokia devices and services in preparation for joining Microsoft once the acquisition closes. Chairman Risto Siilasmaa will stay in his current role and assume the duties of interim CEO.

Microsoft hopes to complete the deal early next year. If that timetable pans out, about 32,000 Nokia employees will transfer to Microsoft, which currently has about 99,000 workers.

The proposed price consists of 3.79 billion euros ($5 billion) for the Nokia unit that makes mobile phones, including its line of Lumia smartphones that run Windows Phone software. Another 1.65 billion euros ($2.2 billion) will be paid for a 10-year license to use Nokia's patents, with the option to extend it indefinitely.

It will represent the second most expensive acquisition in Microsoft's 38-year history, ranking behind an $8.5 billion purchase of Internet calling and video conferencing service Skype. Tony Bates, who ran Skype, is also regarded as a potential successor to Ballmer.

The money to buy Nokia's smartphones and patents will be drawn from the nearly $70 billion that Microsoft held in overseas accounts as of June 30.

Microsoft expansion into mobile devices hasn't fared well so far. Last year, the company began selling a line of tablets called Surface in hopes of undercutting Apple's iPad. The version of Surface running on a revamped version of Microsoft's Windows operating system fared so poorly that the company absorbed a $900 million charge in its last quarter to account for the flop.

Nokia plans to hold a news conference in Finland on Tuesday morning to discuss the deal. Microsoft executives will elaborate on their rationale for the deal shortly after Nokia wraps up its presentation.

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